Site Mobile Navigation

Airborne Wi-Fi May Soar Despite the Doubters

CONVENTIONAL wisdom says that too few people will pay to use Wi-Fi services when they fly and that the fledgling industry is, therefore, not likely to succeed.

After all, travelers in general hate being nickel-and-dimed by hotels for Wi-Fi service, which is readily available free elsewhere. And most airplanes do not have power outlets, which means that Wi-Fi use on a plane is now generally limited by battery life

Despite those hurdles, domestic airlines have been lining up to wire planes for Wi-Fi service. Just a year after it outfitted its first airplane for American Airlines, Aircell has installed its land-based Gogo Wi-Fi service on 526 aircraft for various airlines. Aircell executives told me that installation costs about $100,000 a plane.

An up-and-coming competitor, Row44, recently signed a deal with Southwest Airlines to install its satellite-based system in all of Southwest’s fleet of about 540 Boeing 737s. John Guidon, the chief executive of Row44, wouldn’t say exactly how much it costs to install, except to concede that it is “quite a lot more” than $100,000 a plane.

So the bets have been placed. Every major airline except Continental, which has been coy about its plans for possible Wi-Fi or for installing satellite television on its planes, has announced plans to install Wi-Fi. And smaller competitors like AirTran and Virgin America already have their fleets wired.

But for all the airlines’ spending, there is still not a lot of evidence that the move will pay off through what the industry calls the “take rate,” the percentage of passengers who opt to pay up to $12.95 for a connection. The take rate is now believed to be well below 10 percent on average, though Virgin America has said that it is seeing over 20 percent on some of its flights between California and the East Coast.

But a survey being released Tuesday seems to challenge some of those conventional assumptions. It was commissioned by the Wi-Fi Alliance, a trade group representing companies in the industry and conducted by Wakefield Research. The survey polled 480 frequent business travelers, including 150 who have used in-flight Wi-Fi, from Aug. 11 to Aug. 18.

About three quarters (76 percent) said they would choose an airline based on Wi-Fi availability. More than half (55 percent) said they would shift a flight by one day to get on a plane with a Wi-Fi connection. The survey has a margin of error of plus or minus 4.47 percentage points.

Photo

Credit
Chris Gash

Half of the business travelers said they sometimes took a red-eye flight because flying during the day, without an Internet connection, rendered them unreachable during business hours.

“It’s going to be interesting to watch how this business model shakes out; how much people will pay; what the take rate will be, and how the airlines address things like, does this also become an elite perk available for free in business or first class?” said Kelly Davis-Felner, the marketing director for the Wi-Fi Alliance.

On the ground, “we certainly saw this develop on the hot spot side, so it will be interesting to watch on the airline side, too,” she said.

She also questioned the conventional wisdom. “I’m willing to bet that in all those airlines there is at least one person with a spreadsheet who did the math and figured that it’s probably a worthwhile investment,” she said. “We see viable paid hot spots in airports and higher-end business hotels, in a zillion places, and those business models work. So I think it’s reasonable to expect that some sort of paid business model is going to work in the air.”

We shall see. One thing the conventional wisdom usually overlooks is what I have pointed out before: the proliferation of Wi-Fi-enabled smartphones and other hand-held devices, as well as the growing market in notebook computers.

Laptops are notoriously difficult to use in the cramped confines of an airline coach seat. Little notebooks and hand-held devices are not.

As to solving the power-port problem, that “remains a mystery,” Ms. Davis-Felner said. Of course, hand-held Wi-Fi devices consume less power than a laptop. But it’s still an issue.

“It will be interesting to see if people just opt to carry an extra battery — or start demanding power ports, though I would think that outfitting in-seat power ports in an existing fleet would be a pretty substantial investment,” she said.

Maybe as they lay down their bets, some airlines will heed the gamblers’ advice. In for a penny, in for a pound.

E-mail: jsharkey@nytimes.com

A version of this article appears in print on , on page B5 of the New York edition with the headline: Airborne Wi-Fi May Soar Despite All the Doubters. Order Reprints|Today's Paper|Subscribe